Dealers signal support for 35% estate tax rate

NADA Chairman Annette Sykora: The proposed compromise on the estate tax is "something we can live with."
WASHINGTON — The nation's largest association of auto dealers is seeking a compromise on the federal estate tax.

Last week, leaders of the National Automobile Dealers Association proposed a permanent rate of 35 percent on the taxable portion of an estate. That request is a pullback from NADA's long-held support for permanent repeal of the tax.

The 2009 rate is 45 percent, with a $3.5 million exemption.

NADA Chairman Annette Sykora, a multifranchise dealer from Slaton, Texas, called the proposed compromise "something we can live with."

Sykora and other NADA members made lobbying visits to Capitol Hill last week. The association represents more than 20,000 franchised dealers.

In 2001, dealers and other business groups won a phaseout of the estate tax. The tax previously had rates as high as 55 percent.

Business leaders argued that the so-called death tax threatened the survival of family-owned enterprises.

The phaseout will be completed in 2010. But without further action by Congress and the next administration, the tax will return in full force in 2011. Some members of Congress suggest the 45 percent rate should become permanent.

Seeking compromise
Top federal estate tax rates
2001: 55%
2008-09: 45%
2010: No tax
2011: 55% (if government does not act)
Proposed compromise: 35%

Changing landscape

NADA's new proposal is the strongest indication to date that full repeal is no longer realistic. Democrats took control of Congress two years ago, and their ranks are expected to grow after November's elections. The federal government is strapped for money.

As president, Democrat Barack Obama would be expected to oppose full repeal of the estate tax. Republican nominee John McCain initially opposed making Bush administration tax cuts permanent but has reversed course.

The American International Automobile Dealers Association, which represents about 11,000 import brand dealers, still seeks full repeal of the estate tax. But AIADA spokeswoman Libby Krum said last week that the group "would support substantial reform, given the current political outlook."

Looking to '09

Nearly 600 dealers, state association executives and other auto industry leaders took part in NADA's annual Washington conference. David Regan, NADA's vice president for legislative affairs, said the dealers' Capitol Hill visits were aimed at preparing for the next Congress and administration.

A priority is preventing the next administration from quickly granting authority to states to enforce their own rules on greenhouse gas emissions, Regan told Automotive News.

Automakers have said state-by-state rules would complicate their task of meeting far tougher federal fuel economy standards.

For dealers, such rules would distort the retail marketplace, NADA argues.

NADA also is seeking, perhaps this year, legislation that would require insurers to immediately disclose any vehicle they declare a total loss. The association says such disclosures would stop title washing, the practice of reselling repaired wrecks and flood-damaged cars with clean titles.

Sykora said she went to some Capitol Hill meetings with Mexican dealers who don't want to unknowingly acquire and resell severely damaged vehicles.

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